Lima Water Fund

The fund finances the stabilization of slopes, lagoon recovery and reforestation in the watersheds.

Have you ever wondered what it’s like living in Lima, the world’s second largest desert city? How do the nine million people living there get the water they need to drink, wash, and irrigate crops? Lima, Peru’s capital city, obtains water from three rivers — Rímac, Chillón, and Lurín — that originate in the high peaks of the Andes Mountain Range and flow into the Pacific Ocean.

For decades, the constant pressure for urban expansion, coupled with unsustainable mining and agriculture practices in the highlands of these valleys, has caused a serious pollution and environmental degradation problem in these watersheds.

In addition, there is a need to reduce the amount of water consumed in this city. Currently, each person living in Lima uses approximately 66 gallons of water per day, an amount well above that of other large cities of South America such as Bogotá, in Colombia, or Santiago, in Chile, where the average use is estimated in 40 gallons per person each day.

Replicating a Successful Model

Aquafondo is based on a model that the Conservancy has replicated throughout South America during the past decade and that has revolutionized fresh water conservation through the launch of water funds that pay for the protection and reforestation of watersheds, helping ensure fresh water supply now and in the future.

The Conservancy’s increasing water fund portfolio now includes 15 funds and 7 initiatives by water producers in different stages of development, that provide a constant source of funding for the conservation of more than 7 million acres of watersheds that ensure drinking water for some 40 million people.

The idea of the Lima Water Fund sprang from the “Plan for Greening Lima and Callao”, published in 2005. Based on previous successful water fund experiences, Grupo GEA carried out a study for Lima and Callao –Peru’s main port and adjacent to Lima- that analyzed environmental variables and their relation with urban dynamics, concluding that water availability is the most serious environmental problem faced by the city.

Anna Zucchetti, Executive Director of Grupo GEA, explains that they began working in Lurín, the best conserved valley, to protect it as an environmental corridor for the city. “From then on, we focused on the watershed and looked for innovative ways to protect agricultural lands. We researched international experiences and learned about the water funds. Along the way, we met Conservancy staff and now we have become allies to create the Lima Water Fund,” says Zucchetti.

How will Aquafondo operate?

The financial administration of contributions made to Aquafondo is the responsibility of FONDAM, an organization with ample experience managing resources from debt-for-nature swaps between the governments of Peru and the United States.

The Fund has a Technical Secretariat that sets criteria and establishes priorities for projects and programs according to the Fund’s strategies, which will be in line with national, regional and local policies for the management of water resources.

Aquafondo is also a great opportunity for companies with social and environmental responsibility programs that may be interested in contributing to the conservation and restoration of these watersheds.

“As part of our commitment to sustainable development, we seek to create a culture of water and our participation in a multilateral initiative such as Aquafondo is the best way to show our commitment to society,” says Felipe Cantuarias, Vicepresident of Planning and Corporate Affairs of the Union of Peruvian Breweries Backus and Johnston S.A.A. “We believe that this is a great initiative that will attract other companies and our role will be to catalyze that relationship between the public and private sectors to make this Fund a success, just like in other countries of Latin America.”

Support Across the Board

In addition to the private sector, the launch of Aquafondo has been well received by the public sector. The future mayor of Lima, Susana Villarán, publicly expressed her commitment to support this Water Fund. The regional governments of Callao and Huarochirí have done the same.

The Viceminister of Strategic Development of Natural Resources of the Ministry of Environment, economist Rosario Gómez, states that “a good administration of water funds, with reinvestments in conservation projects and in ecosystem recovery in the headwaters of river watersheds will ensure availability and quality of water, since the sustainable conservation of these ecosystems will help mitigate climate change impacts, diminish waste disposal in the rivers, reduce the effects of erosion and their impact on the cost of water treatment.”

According to Alberto Gonzáles, the Conservancy’s representative in Peru, “this support across the board is a very auspicious sign that this initiative will benefit not only the more than nine million people living in Lima, but also the local communities that live in these valleys and depend on them to survive.”

Getting the price of water right

As global demand for food, energy and shelter put unprecedented pressure on our water resources, protecting water supplies at their source is increasingly critical to ensure the water security of cities. By protecting and restoring forests, grasslands and wetlands, and by reducing agricultural runoff that runs to rivers and streams, cities benefit from having nature retain freshwater, filter pollutants and reduce erosion. These practices increase the capacity and performance of built infrastructure, saving cities money and helping them achieve water security. Funding for watershed conservation may come from a variety of sources but legislation, as that reflected in the new water tariff structure for Lima (Peru), provides the substantial, long-term guaranteed financing needed for source water protection.

Photo by Walter Wust

Download the document explaining Peru’s Water Tariffs and Source Water Protection

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